Economics is all about money, right? It’s all about theories on how to distribute it, use it, make it, or protect it, yes? This is a common perception, and the focus on money dominates the area of political and personal understanding of all things related to important concepts like markets and wealth.
Yet there is substantial evidence that this is simply inadequate at best, wrong at worst. The purpose of money, according to a rigid definition, is to be a medium of exchange and a store of value. But there is quite a lot of evidence that as a store of value, a representation of accumulated wealth, it often fails horribly.
Money only works in a dynamic sense. There are several ways to read that statement, and they are all valid points.
One of the virtues in People’s Economics, which is still evolving, is “equity.” This is a complicated word that has taken on several meanings, but the most important ones are a sense of fairness and a kind of “ownership” stake.
Talking about this as “social equity,” or a belief that all social and political systems need to be fair and that everyone needs to feel they have a stake in greater social success, is not very controversial. There is some politics which revolves around pure individualism and denies or diminishes any need for social equity, for sure. But this is not what the US or any democratic republic was really founded on. It is a denial of an integrated and cooperative world, and I am simply going to reject it out of hand.
But what does any of this mean in practical terms? A bit of an experiment is starting to take hold that may answer this question.
The politics of this moment have little space for something as esoteric as market forces. In much of the developed world, popular media and politicians alike seem to have run back to the safety of a warmed-over 19th century discussion. Is the way forward based on industrial nationalism or international socialism? The language has been updated, but the basic platforms have not.
It seems particularly strange given that half of our waking hours are at work, and for most people the world of work has nothing to do with either view. It is changing, yes, and may not seem to have a coherent vision of just what is happening in any way that affects politics. That disconnect is certainly the first problem.
But there are lessons to learn from the one force which does indeed shape the world of work and directly affects the daily routine of hundreds of millions of people in the developed world. These are the forces of the global market, and they are not going away.
So what’s wrong with the world?
If you’re a longtime reader of Barataria, you know that I have more than a few quirks. One is that in times of trouble, I always go back to the basics, the fundamental. This is part of my instinct as an engineer to hunt out the errant assumptions or whatever caused the problem.
Before I go much further in the topic I am considering, introduced in the last post, I’d like to lead you down my trail of logic – or lack thereof. Feel free to comment on any point of this which you think is weak or just plain wrong.
The US trade deficit in goods jumped a solid $80 billion per year in 2018 to $878 billion, a net increase of 10% over 2017. This rather abstract figure is naturally spun to reflect either a rebuke of Trump and his policies or as a sign that the economy is particularly strong, depending on your perspective. From the point of view of China, it’s a sign that they might well be “winning” a trade war.
Is that what any of it means? The long answer is no, of course, but it begs the question as to what any of it actually does mean. It’s important to put the trade deficit into context and reach a deeper understanding of the flow of money around the world. The resulting analysis does show that there is a problem in the world, a fundamental imbalance, but does not tell us how much we should be worried about it.
What has been called “The best job market in half a century” is reason enough to revisit this piece from three years ago.
Is technology a net creator or destroyer of jobs? The question is as old as the Industrial Revolution, when workers in mills found themselves put out of work by large industrial looms. In France, they threw their shoes (sabots) into the weaving machines to destroy them – the origin of the term “sabotage”. The protests didn’t stop the machines, however, and the workers had to find something else to do in an ever-changing economy where machines did more and more work.
Today, the pace of technological change is faster than ever, with new gadgets coming into our lives constantly. Automation is also transforming our lives, with new robots and artificial intelligence replacing workers constantly. Are today’s productivity gains tomorrow’s unemployment? Increasingly those who study technology in our lives and the popular media are coming to the conclusion that yes, workers are net losers in the race against tech. And this is not a partisan issue.
Wall Street is cheering as trade talks with China progress. A full-on trade war may be averted. Is this reason to celebrate?
While it’s always good to avoid any kind of war, there is still reason to be concerned. Two very different nations with different economies still have to come to some kind of terms over the long haul. More to the point, it’s not about the differences in the economies but different approaches to very basic aspects of being a nation-state, including law.
Leaders sitting down and working out a deal seems like a good thing. But as always, the nature of the deal itself is very important.